Do Publishers See E-books As A Threat To Their Profit Margins?

E-books and e-book readers are a relatively new development. However, the book buying public seems to have grown accustomed to e-books very quickly. Much of the credit for that must surely be given to the Amazon Kindle reader - in particular the Kindle 2.0 which hit the market in February of 2009. The third generation Kindle was released in August of 2010 and, despite prophecies of doom for the Kindle following the release of the Apple iPad, is selling faster than ever. There can't be much doubt that it was the Kindle 2.0 that really helped e-books to take off.

Another important factor was the huge choice of Kindle books available. Amazon has always had a lot more titles on offer than the chasing pack. Currently, they have in excess of 750,000 e-books to choose from on their Kindle store - and that's just the Kindle books that are for sale. They have a further 1.8 million books which are now out of copyright and can be downloaded for free direct from Amazon's Kindle store.

However, although the public seems to have accepted e-books, it's debatable if the same can be said for many of the big publishing firms. E-books have completely revised the long established publishing cycle. It's not just that e-books are cheaper than printed books (since they consume no paper, ink or bindings) - there's no reason why they shouldn't be on sale simultaneously with the hardback edition. No need to wait for the paperback, the e-book version is immediately available from day one.

Clearly, the availability of a cheaper version alongside the hardback is something which could have an impact upon the sales of hardbacks. At the moment, Amazon are shipping 180 e-books for every 100 hardbacks that they sell. This seems to have created quite a stir for many of the major publishing houses. They have already had several run ins with Amazon over the pricing of e-books.

Publishers like Harper Collins, Penguin and Hachette recently changed to the "agency model" for their e-books. In plain English - it's the publisher who sets the sales price, not the retailer (Amazon). This has resulted in elevated prices for some e-books - with some of them actually costing more than the print version.

Kindle owners quickly retaliated by awarding "one star" reviews to books where they felt that the Kindle book price was too high. Some fairly critical comments were left on the Amazon website - aimed at the publishers by and large - and it was suggested that potential customers boycott both the Kindle and the hardback versions until prices are set at more reasonable levels. There have already been some price cuts.

The adoption of such a profit oriented approach seems to be more than a little short sighted on the part of the publishers. It doesn't seem unreasonable to assume that e-book readers owners read a good number of books. People who read a book a month or so are unlikely to buy an e-book reader wouldn't you think? In other words, e-book reader owners are the target market for the major publishing houses.

It seems obvious - just even - that e-books should cost less than traditional books. Apart from the lack of paper, ink and bindings, they have no delivery fees associated with them. They are also more environmentally friendly - even when the materials used in the e-book readers themselves are taken into consideration. It seems probable that e-book reader owners would not only be able to work this out for themselves but would, quite justifiably, anticipate that the price would reflect this.

Whilst it's not out of the question that the publisher's tactics may help to maintain their profits in the short term, they run the risk of antagonising their best customers by adopting this approach. Artificial price fixing is likely to antagonise the buying public and, after a series of one star reviews and public calls for boycotts, authors would most likely also be discontented. Publishers have just as much to gain from the e-book revolution as the public. The savings apply on both sides of the fence, publishers save money - which should be passed on to the public. If publishers can adapt to e-books, in the same way that readers have, they may continue to thrive. On the other hand, if their desire for short term profits inures them to the possible opportunities offered by this new medium, they will be rejected by both their authors and their readers.